Get off the site: Chanel has sold its outlets in Russia
Chanel sold its sites in the Russian Federation, which were located in Yekaterinburg, namely— in the Luxury Gallery shopping center. These are three premises, totaling just over 600 square meters. m. They were bought by Russian entrepreneur Lina Kurbanova for almost 170 million rubles, Izvestia learned. The government commission has already approved this deal. The Chanel brand has 18 leased premises in the Moscow region, according to the company's website.
What and where did Chanel sell in Russia
At the next meeting of the government commission for the control of foreign investments, which took place at the end of February, officials approved the deal with Chanel assets in Russia, Izvestia learned after reviewing the documents of the Cabinet of Ministers. We are talking about the sale of premises that belonged to the Russian subsidiary of the Chanel brand in the Luxury Gallery shopping center in Yekaterinburg.
Their size, according to Rosreestr data, is just over 600 square meters. m. It follows from the documents of the Cabinet of Ministers that the buyer was an individual entrepreneur Lina Kurbanova, who is registered in Kazan. She paid 168 million rubles for Chanel sites, including VAT. Moreover, 49 million of this amount went to the budget as a 30% fee for companies leaving the Russian Federation.
Chanel's website says that the brand rents about 25 sites in the Moscow region: previously, 18 of them sold clothes, glasses, and jewelry. The premises are located in the leading shopping centers of the capital — these are TSUM, GUM, Vremena Goda, Crocus City Mall and others. The remaining squares still function as "corners" with small goods: for example, cosmetics and perfumes in specialized stores such as Articoli and others.
Izvestia sent inquiries to the international Chanel, the Luxury Gallery shopping center, the above-mentioned metropolitan shopping centers, as well as to an entrepreneur from Tatarstan.
In March 2024, the owners of the sites where the fashion house rented its premises began to report that the company wanted to terminate the lease agreements and finally wind down this business. But the contracts were "indissoluble," which in practice means that the brand received favorable terms with no way to terminate the lease before a certain date. If Chanel still wanted to stop their operation, the contracts would contain extremely high exit penalties. As a result, the Europeans were unable to terminate any agreements.
Foreign brands have different attitudes to the risks associated with operating in Russia, for example, some Italian brands still operate in the country without fear of consequences, Dmitry Tomilin, a member of the presidium of the Russian Council of Shopping Centers (RSTC), told Izvestia. But international names that have serious turnover in the United States or Europe treat risks differently, especially if the share of domestic sales in their global revenue structure does not exceed several percent. Then the company is ready to abandon sales in the Russian Federation in order not to face problems in priority markets, the expert noted.
— Some European brands reacted very harshly to possible risks and closed their stores in the country. They paid "compensation" and completely withdrew from the market, such as LVMN, as the fashion house brands closed boutiques in Moscow and St. Petersburg. Other names, which are a little more lenient in their assessment of possible problems, remain in rental relationships in Russian cities. Plus, the warming in Russian-American relations began to have an impact on the market.: Some brands took this as a signal that a comeback was possible," the expert explained.
When will foreign brands start returning to Russia
After all, most businesses do not want to lose the Russian consumer: Russia is in the top 10 countries in terms of population, and we have always had a positive sales trend, Dmitry Tomilin added. And although Yekaterinburg is one of the top 5 cities by sales in Russia, these are still not the capitals - Moscow and St. Petersburg, where real estate is premium. Therefore, it may not be profitable for Chanel to develop its low-profit stores in the future, he concluded.
This is an expected deal, because the brand actually left Russia a few years ago and no longer conducts commercial activities in the country, and in such conditions it is easier to convert property into a more liquid asset, said Pavel Lupin, vice president of the Union of Shopping Centers.
— Despite the fact that news began to appear periodically about the imminent return of foreign brands to the country, the conditions for starting this process have not yet developed. The starting point will be the lifting of sanctions related to international payments and logistics, as well as political detente," the expert explained to Izvestia. — And even after that, it will take about a year to restore all supply chains, open stores and purchase goods. I believe that this will happen no earlier than the end of 2026 or the beginning of 2027. But, as we can see, Chanel decided not to wait for this moment.
To date, the vacancy rate in Russia is at a comfortable level of 5-6% and is expected to remain throughout the year, the Ministry of Industry and Trade told Izvestia.
Pavel Lupin believes that in the near future we can expect an increase in this indicator against the background of reports from traditional retailers about a decrease in offline sales and the beginning of negotiations on new discounts. According to him, this is an inertial process and one should not expect drastic changes in shopping malls.
— Currently, Russian brands occupy the largest share in Russian shopping malls, while Turkish brands are in second place — they are more flexible in logistics and pricing, and they quickly adapt to sanctions regulation. Five years ago, the market was filled with European and American fashion operators, but their business models turned out to be too fragile in the face of external shocks," he concluded.
Starting in 2022, Chanel's strategy is to gradually reduce its presence in Russia, and the company seeks to minimize financial losses by selling assets, the director of the CORE retail department told Izvestia.XP Evgeniya Prilutskaya.
— The sale of the only property in the property speaks about the desire to minimize risks and withdraw capital without a sharp break with the market. While the company retains lease agreements, this is the strategy and general trend of luxury players. Early termination of existing brand contracts is associated with high fines and threats of lawsuits. As a result, luxury players fulfill obligations under existing contracts until they expire," she said.
According to the company's estimates, the vacancy rate in the luxury segment of the shopping center is 10-15%. Shopping malls here are trying to rebuild, filling vacant sites with the help of less high-status tenants, Evgenia Prilutskaya added. The new leaders in this regard are Russian and Asian names, which have already occupied about 40% of the area. For comparison: Back in 2019, 70% of luxury brands were European and American businesses, the expert recalled.
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